Q1 2024 Ryan Specialty Holdings Inc Earnings Call

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Yes.

Unknown Executive: Good afternoon, and thank you for joining us today for Ryan Specialty Holdings' first quarter and first quarter 2024 earnings conference call. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com.

Good afternoon, and thank you for joining us today for Ryan specialty Holdings' first quarter first quarter 2024 earnings conference call.

Unknown Executive: In addition to this call the company filed a press release with the SEC Earlier. This afternoon, which has also been closer to its website at last specialty dotcom.

Unknown Executive: On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any such forward-looking statements, which are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC

Unknown Executive: On today's call management's prepared remarks and answers to your questions may contain forward looking statements.

Unknown Executive: You should not place undue reliance on any forward looking statements. These statements are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today.

Unknown Executive: Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. The company assumes no duty to update such forward looking statements in the future except as required by law.

Unknown Executive: The company assumes no duty to update such forward-looking statements in the future, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and is available on the company website. With that, I'd now like to turn the call over to the founder, chairman, and chief executive officer of Ryan Specialty, Pat Ryan.

Patrick G. Ryan: Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the F E.

Patrick G. Ryan: And available on the company website with that I'd now like to turn the call over to the founder Chairman and Chief Executive Officer, and specialty right right.

Patrick G. Ryan: Good afternoon, and thank you for joining us to discuss our first quarter results.

Patrick G. Ryan: Good afternoon, and thank you for joining us to discuss our first quarter results. With me on today's call is our president, Tim Turner, our CFO, Jeremiah Bickham, and our CEO of Underwriting Managers, Miles Wuller. Also with us is our Director of Industrial Relations, Nick Messick.

Patrick G. Ryan: With me on today's call is our President Jim Turner.

Patrick G. Ryan: Our CFO, Jeremy, but and our C E O of underwriting managers files ruler.

Patrick G. Ryan: Also with US is our director of Investor Relations.

Patrick G. Ryan: Much like the first quarter represents a very strong start to the year.

Patrick G. Ryan: The first quarter represents a very strong start to the year. Our momentum throughout 2023 carried right into our excellent first quarter. We generated excellent top and bottom line results and made long-term sustainable investments in our business to fortify our competitive position. Revenue of 552 million represents growth of 20.6% year over year, driven by organic growth of 13.7%. On top of the strong growth we posted in the first quarter of 2023, growth was broad-based across our specialties, significant new business production, and a meaningful contribution from our recent acquisition. We grew adjusted EVADAC 25.8% to 157 million, and the adjusted EBITDA margin expanded 120 basis points to 28.5%.

Patrick G. Ryan: Our momentum throughout 2023 carried right into our excellent first quarter.

Patrick G. Ryan: We generated excellent top and bottom line results and made a long term sustainable investments in our business to fortify our competitive position.

Patrick G. Ryan: Revenue of 552 million represents growth of 26% year over year.

Patrick G. Ryan: Driven by organic growth of 13, 7% on top of the strong growth we posted in the first quarter of 'twenty to 'twenty three.

Patrick G. Ryan: Growth was broad based across our specialists are.

Patrick G. Ryan: Significant new business production and a meaningful contribution from our recent acquisitions.

Patrick G. Ryan: Grew adjusted EBITDA 25, 8% to 157 billion.

Patrick G. Ryan: Adjusted EBITDA margin expanded 120 basis points to 28, 5%.

Patrick G. Ryan: Reflecting the benefits of our Accelerate 2025 Program and Underlining Margin Improvement, adjusted diluted EPS increased to 34.6% at 35 cents per share. Our results clearly reflect our formidable value proposition of differentiated talent and niche specialization. We continue to outperform the competition, which is reflected in our strong new business growth. We captured broader E&S tailwinds and capitalized on specific areas of accelerated growth; property continued to be very strong, even on top of a great prior year. Casually, he was also a significant contributor.

Patrick G. Ryan: Reflecting the benefits of our accelerated twenty's twenty-five program and underlying margin improvement.

Patrick G. Ryan: Adjusted diluted EPS grew 34.6 per site.

Patrick G. Ryan: 35 cents per share.

Patrick G. Ryan: Our results clearly reflect our formidable value proposition, that's differentiated talent and niche specialization.

Patrick G. Ryan: We continue to outperform the competition.

Patrick G. Ryan: As reflected in our strong new business growth.

Patrick G. Ryan: We captured broader E&S still ones and capitalized on specific areas of accelerated growth.

Patrick G. Ryan: Property continued to be very strong even on top of a great prior year okay.

Patrick G. Ryan: I usually it was also a significant contributor.

Patrick G. Ryan: And we saw a strong acceleration of growth.

Patrick G. Ryan: They are over here.

Patrick G. Ryan: And we saw a strong acceleration in growth, year over year. Overall, I'm very pleased with our performance in court. Our industry-leading team's dedication to delivering better value and service for our clients is unmatched. Turning to the market, trends remain positive. We continue to believe the E&S market will consistently outpace growth in the admitted market, overshadowing any cyclical shifts in certain lines with respect to submission, flow, and price. Furthermore, we continue to believe secular changes are driving most of the growth that we're seeing in the E&S market. I'll turn it into M&A. We've completed our acquisition of Castell Underwriting Agency.

Patrick G. Ryan: Overall, I'm very pleased with our performance in the quarter.

Patrick G. Ryan: Our industry, leading teams dedication to delivering better value and service for our class is unmatched.

Patrick G. Ryan: Turning to the market trends remain positive.

Patrick G. Ryan: We continue to believe the E&S market will consistently outpaced growth in the admitted market.

Patrick G. Ryan: Overshadowing any cyclical shifts in certain lines with respect to submission flow and pricing.

Patrick G. Ryan: We continue to believe secular changes are driving most of the growth that we're seeing in the E&S market.

Patrick G. Ryan: Now turning to M&A.

Patrick G. Ryan: We have completed our acquisition of cash still underwriting agencies.

Patrick G. Ryan: Through this transaction, we bolstered our delegated authority offering by adding top talent and differentiated intellectual capital. We also significantly enhanced our UK and European footprint and set the stage to accelerate our international expansion. We're pleased to have the Castile team on board.

Patrick G. Ryan: Through this transaction, we bolstered our delegated authority offering.

Patrick G. Ryan: Top talent and differentiated intellectual capital.

Patrick G. Ryan: We also significantly enhanced our U K and European footprint.

Patrick G. Ryan: Set the stage to accelerate our international expansion.

Patrick G. Ryan: We're pleased to have the cash fell team on board and we look forward to integrating this great business and the Ryan specialty.

Patrick G. Ryan: And we look forward to integrating this great business into Ryan Specialty. Further, on the M&A front, our outlook remains ambitious. Our pipeline continues to be robust, including both Tuckins and Large Deals. As we previously noted,

Patrick G. Ryan: Further on the M&A front, our outlook remains ambitious.

Patrick G. Ryan: Our pipeline continues to be robust.

Patrick G. Ryan: Clothing, both tuck ins and large deals.

Patrick G. Ryan: As we've previously noted.

Patrick G. Ryan: Our overall strategy is aligned around the evolving and growing needs of our clients and our trading partners to continue providing a dynamic value proposition. We're committed to expanding our total addressable market within specialty insurance, particularly with targeted investments in delegated authority, benefits, and alternative risks, as well as deepening our considerable moat by enhancing our scale, scope, and intellectual capital. We only move forward when all of our criteria for M&A are met.

Patrick G. Ryan: Our overall strategy is aligned around the bobbing and growing needs of our clients and our trading partners.

Patrick G. Ryan: To continue providing a dynamic value of proposition.

Patrick G. Ryan: We're committed to expanding our total addressable market within specialty insurance.

Patrick G. Ryan: Particularly with targeted investments in delegated authority.

Patrick G. Ryan: Benefits and alternative risks.

Patrick G. Ryan: As well as deepening our considerable most.

Patrick G. Ryan: By enhancing our scale scope and intellectual capital.

Patrick G. Ryan: We only move forward with all of our criteria for M&A are about.

Patrick G. Ryan: Each acquisition must be a strong cultural fit. Strategic and acquisitive. Turning the Talents.

Patrick G. Ryan: Each acquisition must be a strong cultural fit.

Patrick G. Ryan: Strategic and accretive.

Patrick G. Ryan: Turning to talent.

Patrick G. Ryan: Our people remain our greatest asset. We successfully onboarded new colleagues, adding to our world-class team through the first quarter.

Patrick G. Ryan: Our people remain our greatest asset.

Patrick G. Ryan: We successfully on boarded new colleagues, adding to our world class team through the first quarter.

Patrick G. Ryan: We believe that these important investments across our specialties will drive our firm's future prospects and will position us to grow for decades. We believe our commitment to constant innovation and ongoing investment in talent has enabled us to consistently achieve industry-leading organic growth. Now turning to Accelerate 2025. As we continue to execute on the program, we have identified additional opportunities to drive continued growth and innovation, deliver sustainable productivity increases over the longer term, and accelerate margin improvement.

Patrick G. Ryan: We believe that these important investments across our specialties will drive our firm's future prospects and will position us to grow for decades.

Patrick G. Ryan: We believe our commitment to constant innovation and ongoing investment in talent has enabled us to consistently achieve industry, leading organic growth.

Patrick G. Ryan: Now turning to accelerate 'twenty to 'twenty five.

Patrick G. Ryan: As we continue to execute on the program, we identified additional opportunities to drive continued growth and innovation.

Patrick G. Ryan: The liver sustainable productivity increases over the longer term and accelerate margin improvement.

Patrick G. Ryan: We now expect to generate annual savings of approximately $60 million in 2025, with cumulative special charges of approximately $110 million through the end of 2024. These investments will both enhance and scale up our operating model, enabling us to move faster, resulting in lasting benefits for our clients. We are creating platforms and systems that are capable of handling significant future organic and inorganic growth.

Patrick G. Ryan: We now expect to generate annual savings of approximately $60 million and 2025 with cumulative special charges were approximately 110 billion through the end of 'twenty 'twenty four.

Patrick G. Ryan: These investments will both enhance and scale up our operating model.

Patrick G. Ryan: Enabling us to move faster, resulting has lasting benefits to our clients.

Patrick G. Ryan: We are creating platforms and systems that are capable of handling significant future organic and inorganic growth looking ahead. The second quarter is off to a strong start and we're encouraged by continued momentum across each of our specialties.

Patrick G. Ryan: Looking ahead, the second quarter is off to a strong start, and we're encouraged by continued momentum across each of our specialties. I'm confident that 2024 will be an outstanding year for our firm. We believe our growth will continue to be driven by secular factors, such as increasing risk and complexity, retail brokers becoming larger through solid organic growth and M&A, as well as panel consolidation. Added to this is our unique competitive position with strategies and high-growth business. Our ability to innovate with new product development and the expansion of our total addressable market. We remain confident these trends are sustainable and supportive of our growth for the foreseeable future.

Patrick G. Ryan: I'm confident that 'twenty 'twenty four will be an outstanding year for our firm.

Patrick G. Ryan: We believe our growth will continue to be driven by secular factors.

Patrick G. Ryan: Such as increasing risk and complexity.

Patrick G. Ryan: Retail brokers, becoming larger through solid organic growth and M&A.

Patrick G. Ryan: As well as panel consolidation.

Patrick G. Ryan: Adding to this is our unique competitive positioning with strategies and high growth businesses.

Patrick G. Ryan: Our ability to innovate with new product development.

Patrick G. Ryan: And the expansion of our total addressable market.

Patrick G. Ryan: We remain confident these trends are sustainable and supportive of our growth for the foreseeable future.

Timothy William Turner: As always, I want to thank our entire team for their dedication in once again delivering excellent performance and adding value for our clients, trading partners, and ultimately our shareholders. I'm pleased to turn it over to Tim. Tim, thank you.

Speaker Change: As always.

Tim: Want to thank our entire team for their dedication and once again, delivering excellent performance and adding value for our clients trading partners and ultimately our shareholders.

Timothy William Turner: I'm pleased to turn it over to Tim Tim.

Timothy William Turner: Thank you very much, Pat. We had a very strong start to 2024 across our specialties. Our entire team remains determined to sustain that momentum throughout the year, diving into our specialty. Our Wholesale Brokerage Specialty generated strong growth. Our property practice had a great quarter, even on top of a great prior year.

Tim: Thank you very much Pat we had a very strong start to 2024 across our specialties. Our entire team remains determined to sustain that momentum throughout the year.

Timothy William Turner: Diving into our specialties.

Timothy William Turner: Our wholesale brokerage specialty generated strong growth.

Timothy William Turner: Our property practice had a great quarter.

Timothy William Turner: Even on top of a great prior year at.

Timothy William Turner: The property market continues to be impacted by elevated levels of attritional and secondary perils, including severe convective storms, more retention of risk, and moderating yet persistent inflation driving up loss costs. With expectations for a year of an above-average number of hurricanes and other named storms, we expect concerns for large loss events to be top of mind for the industry. Add to this growing property exposures in both high value concentrations and areas of higher catastrophe risk, like floodplains, coasts, and wildfire-prone areas, and we believe we will continue to see an increase in the frequency and severity of losses.

Timothy William Turner: The property market continues to be impacted by elevated levels of attritional and secondary perils, including severe convective storms more retention of risk.

Timothy William Turner: And moderating yet persistent inflation driving up loss costs.

Timothy William Turner: With expectations for a year I'm, an above average number of hurricanes and other named storms, we expect concerns for large loss of that to be top of mind for the industry.

Timothy William Turner: Add to this growing property exposures in both high value concentrations.

Timothy William Turner: And areas of higher catastrophe risk like flood plains, COSE and wildfire prone areas. We believe we will continue to see an increase in the frequency and severity of losses.

Timothy William Turner: And all of these factors are driving a continued flow of new business into the E&S market and high retention as risks remain in our channel. At the same time, our deep bench of talented professionals is successfully navigating this dynamic environment. Through our laser focus on continuously providing value to our clients, we believe we continue to win market share from our competitors. We continue to believe property will be a strong driver of growth for Ryan Specialty in the quarters ahead.

Timothy William Turner: And all of these factors are driving continued flow of new business into the E&S market and high retention as risks remain in our channel.

Timothy William Turner: At the same time, our deep bench of talented professionals is successfully navigating this dynamic environment.

Timothy William Turner: Through our laser focus on continuously providing value to our clients. We believe we continue to win market share from our competitors.

Timothy William Turner: We continue to believe property will be a strong driver of growth for Ryan specialty in the quarters ahead.

Timothy William Turner: Even as we lagged behind last year's excellent quarter, our casualty practice had a fantastic quarter. More broadly, the market has seen an increasing number of casualty classes face higher loss costs. Notably, an acceleration of social inflation marked by increased frequency and more prolonged cases, higher settlements, judgments, and nuclear verdicts, amplified by litigation finance, a protracted impact from recent reserve charges on the 2015 to 2019 accident years, as well as rising uncertainty and reserve adequacy of more recent years, and the continued pullback and risk appetite from the admitted market in certain E&S lines, like construction. This unpredictability requires specific industry and product level knowledge.

Timothy William Turner: As we lap last year's excellent quarter, our casualty practice had a fantastic order more.

Timothy William Turner: More broadly the market has seen an increasing number of casualty classes face higher loss costs.

Timothy William Turner: Notably and acceleration of social inflation marked by increased frequency and more prolonged cases higher settlements judgements and nuclear verdicts amplified by litigation finance.

Timothy William Turner: A protracted impact from recent reserve charges on that 2015 to 2019 accident years.

Timothy William Turner: As well as rising uncertainty in reserve adequacy of more recent years and the continued pullback in risk appetite from the admitted market and certain E&S lines like construction.

Timothy William Turner: This unpredictability require specific industry at product level knowledge.

Timothy William Turner: Thanks to our world-class technical expertise and deep bench, we are perfectly positioned to execute and deliver value for our clients. We are confident that Casualty will be a strong contributor to our 2024 performance. Overall, our Wholesale Brokerage Specialty team remains committed to delivering innovative strategies and products to meet the ever changing needs of our clients. Now, turning to our delegated authority specialties, which include both binding and underwriting management. Our Binding Authority Specialty had an excellent quarter.

Timothy William Turner: Thanks to our World class technical expertise and deep bench, we are perfectly positioned to execute and deliver value for our clients.

Timothy William Turner: We are confident that casualty will be a strong contributor to our 2020 for performance.

Timothy William Turner: Overall, our wholesale brokerage specialty team remains committed to delivering innovative strategies and products to meet the ever changing needs of our clients.

Timothy William Turner: Now turning to our delegated authority specialties, which include both binding and underwriting management.

Timothy William Turner: Our binding authority specialty had an excellent quarter.

Timothy William Turner: Through our high-caliber talent and new proprietary products, we offer a seamless experience for our clients, who have small but tough to place commercial PNC risks. We continue to believe the consolidation of panels and binding authority remains a long-term growth opportunity, and we are well positioned to capitalize. Our Underwriting Management Specialty also performed well in the quarter, led by property and casualty and meaningful contributions from our recent acquisitions. As Pat noted, we are excited to officially onboard Castell to the Ryan Specialty family, which adds to our top decile talent, expands our international footprint, makes us stronger in the UK and Europe, and positions us well to accelerate our international expansion.

Timothy William Turner: Through our high caliber talent and new proprietary products, we offer a seamless experience for our clients.

Timothy William Turner: Who have small but tough to place commercial P&C risks.

Timothy William Turner: We continue to believe the consolidation of panels and binding authority remains a long term growth opportunity and we are well positioned to capitalize.

Timothy William Turner: Our underwriting management specialty also performed well in the quarter.

Timothy William Turner: Led by property and casualty and meaningful contributions from our recent acquisitions.

Timothy William Turner: As Pat noted we are excited to officially onboard cashed out to the Ryan specialty family.

Timothy William Turner: Which adds to our top decile talent expands our international footprint.

Timothy William Turner: It makes us stronger in the U K, and Europe and positions us well to accelerate our international expansion.

Timothy William Turner: Turning to price, although we continue to experience various micro cycles across the insurance line, more broadly, we see two important trends. Property is seeing a period of pricing stabilization after years of large increases. And casualty, due to the trends mentioned earlier, is seeing an acceleration in pricing across an increasing number of classes. Moreover, across both of these major industry classes, there remains heightened uncertainty in the loss environment. This is driving more risks into the E&S marketplace as it offers significantly more freedom of rate and form and the ability for insurers and underwriters to adjust pricing and the terms and conditions of coverage more quickly.

Timothy William Turner: Turning to price, while we continue to experience various micro cycles across insurance lines.

Timothy William Turner: More broadly we see two important trends.

Timothy William Turner: Property is seeing a period of pricing stabilization after years of large increases.

Timothy William Turner: And casualty due to the trends mentioned earlier is seeing an acceleration in pricing across an increasing number of classes.

Timothy William Turner: Across both of these major industry classes, there remains heightened uncertainty in the loss environment.

Timothy William Turner: As we've noted consistently in any cycle, as certain lines are perceived to reach pricing adequacy, admitted markets tend to step back in on certain placements. However, this is still not playing out. And the standard market is not meaningfully impacted by rate or flow in the aggregate. We are well positioned to assist all our trading partners navigate an ever changing insurance landscape. We continue to expect the flow of business into the non-admitted market to be a significant driver of Ryan Specialty's growth, more so than rate. With that, I will now turn the call over to our Chief Financial Officer, Jeremiah Bickham, who will give you more detail on the financial results of our first quarter. Thank you.

Jeremiah Rawlins Bickham: Thank you, Tim. Before getting into our results for the quarter, I want to discuss a change highlighted in our press release. Beginning this quarter, the company is modifying its method of calculating organic revenue growth. This revised calculation methodology is an improved representation of our core business performance as it now completely removes fiduciary investment income and contingent commissions from the current and prior year periods, whereas before we only excluded the change in fiduciary income and contingent commissions between periods. Of course, the new calculation continues to exclude the impact of MNA and FX from the current year.

Jeremiah Rawlins Bickham: This formulation is a more widely used calculation methodology, and as a result, we are providing additional revenue disclosure that we believe investors will find very useful. Now turning to the quarter, in Q1, we grew total revenue 20.6% period over period to $552 million, fueled by another very strong quarter of organic revenue growth at 13.7%. And contributions from M&A, which added nearly seven percentage points to our top line. Growth was once again driven by very strong renewal retention, ongoing tailwinds in much of the E&S market, and our ability to win substantial amounts of new business. Adjusted EBITDAC for the first quarter grew 25.8% period over period to $157 million.

Jeremiah Rawlins Bickham: Adjusted EBITDAC margin improved 120 basis points to 28.5%, driven by another strong quarter of revenue growth, partial savings from Accelerate 2025, and underlying margin improvement in the business. Adjusted diluted EPS grew 34.6% to $0.35 per share. In the quarter, we return capital to shareholders through our first dividend, including both a special and a regular quarterly dividend. Earlier today, our board declared a regular quarterly dividend of 11 cents payable later this month.

Jeremiah Rawlins Bickham: Turning to our Accelerate 2025 program, we had approximately $29 million in charges for the quarter, bringing our total to date to $77 million. As Pat noted, we found additional opportunities to drive more efficiencies and greater savings. We now expect cumulative special charges for the program of approximately $110 million through the end of 2024 and expect annual savings of approximately $60 million in 2025. We expect approximately half of these savings will be realized in 2024, with the majority of those savings falling to our bottom line.

Jeremiah Rawlins Bickham: Those savings will be paired with an underlying margin expansion in our business that we expect in most years, including 2024. Based on our current forecast, we expect to record gap interest expense, which is net of interest income on our operating funds, of approximately $32 million in Q2 and $123 million in 2024. Our adjusted effective tax rate was 26.1% for the quarter.

Jeremiah Rawlins Bickham: Based on the current environment, we expect a similar tax rate for the remainder of 2024. Now, turning to guidance. Under the legacy method for calculating organic revenue growth, we are maintaining our full year 2024 guidance for organic revenue growth. Now adjusting solely for the modified methodology, which we will be reporting under going forward, our revised guidance for the full year 2024 is now between 12.5 and 14.0%. In addition, we are maintaining our adjusted EBITDAC margin guidance of 31.0 and 31.5%.

Jeremiah Rawlins Bickham: In summary, we are pleased with our very strong first quarter performance as we grew market share in several of our businesses, invested in talent, products, and technology, all while expanding margins. Moving forward, we will continue to organically invest in our business to support sustainable and profitable growth. We will continue to execute on our disciplined M&A strategy with high-quality acquisitions, and we will maintain our strong balance sheet while returning excess cash, all of which should create long-term sustainable value for shareholders.

Jeremiah Rawlins Bickham: Our dynamic and differentiated business model continues to position us well to serve our clients and deliver the innovative solutions that our clients have come to expect as a hallmark of Ryan Specialty. With that, we thank you for your time and would like to open up the call for Q&A. Operator. Thank you. At this time...

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the questioning queue. If you wish to remove your question from the queue, please press star 2. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Elyse Greenspan with Wells Fargo. Please proceed with your question.

Elyse Beth Greenspan: Hi, thanks. Good evening.

Patrick G. Ryan: You know, my first question is just, I guess, you know, your organic growth view, right? It sounds like it's similar, you know, to last quarter minus, you know, the accounting change that you highlighted. Over the past couple months, we've seen some volatility within, you know, some stamping data that comes out from some of the largest ENS states went down in March, and then we saw some growth in April. Can you just help us, like, triangulate what we see within the stamping data and what that means, you know, for the overall strength of the ENS market? Sure, Elyse.

Patrick G. Ryan: Sure, Elyse. We fielded several questions about the monthly stamping office numbers in previous quarters. And the stamping office data is very helpful over a full calendar year, and it remains very, the flow remains very strong, as we can see. But on a month or even a quarter, it can be misleading and have timing issues, and that's really what we saw here. Our growth trends through the stamping office data are better measured over a full year, but again, they remain very strong double-digit growth flows.

Jeremiah Rawlins Bickham: And then my second question, you guys raised the savings program, right, and also raised the amount that you expect to see this year, but there wasn't a change to the margin guide, so can you, you know, is it just that there's some offsets relative to the guidance, or you're just, and I know there's obviously a range around margins. That could be it.

Jeremiah Rawlins Bickham: No, hi, Elyse. Fair question. So the 10 million additional saves from Accelerate, remember that only about half of them, like the rest of the saves from the program, are going to come through this year. And we've said the majority, but not all, will fall to the bottom line. And also, I mean, I'm sure you know that there's the possibility of fewer interest rate cuts this year, too, which would present a benefit to margin as well.

Jeremiah Rawlins Bickham: These are just a few variables at play, though, and while they're positive, there's still a long way to go in the year. And what we think that both of these two variables represent is just a higher likelihood that we hit the high end of the range on our margin guide.

Timothy William Turner: Okay, and then you guys seem pretty positive about the casualty market, right, that property is stabilizing. Is there anything we should be paying attention to just in terms of your mix and which quarters, I guess, of the remaining three could see higher versus maybe slightly lower organic growth? I know, I think Q2 and Q4 are heavier from a property perspective, but anything that you would highlight in terms of the cadence of growth in the back three quarters?

Timothy William Turner: I know nothing that stands out, Elyse. Casualty, you know, our casualty practice had a fantastic quarter. We're seeing an acceleration in pricing across an increasing number of classes. You know, higher loss trends are really driving pricing. We can see a significant increase in flow into the channel in some of the classes we've talked about before, transportation, habitational.

Timothy William Turner: And then property, you know, we've mentioned before, it continues to be a very strong driver for us in 24. However, we're seeing some pricing stabilization after years of large increases. But the data is mixed because so much of it is slanted towards admitted standard lines property business. What we're seeing in the non-admitted market is more volatility, and more difficult risks being added. We see growth opportunities throughout the market. As you know, it's a windy buying season in the second quarter, and we're very excited about that. We see it as a growth opportunity this year and Elyse.

Jeremiah Rawlins Bickham: Growth Opportunity This year. And Elyse, I want to add to that and try to be helpful.

Operator: There's seasonality in our business, so we've said Q2 is our biggest month in terms of dollars. But there's not seasonality, predictable seasonality anyway, to our organic growth. And if you look at any two quarters, and you infer a trend from that, you're just as likely to get a wrong answer as you are a right answer. So, you know, please don't make the mistake of inferring a trend just because one quarter follows higher or lower than the other. That's why we give guidance in the first place, to give people the best possible view of how the year will turn out versus an individual quarter.

Michael David Zaremski: Our next question is from Mike Zaremski with BMO Capital Markets.

Michael David Zaremski: Thanks, good afternoon. I was kind of hoping to be later in the queue because we don't have a lot of time to figure out the new improved organic guide, in a good way. Under the old, the 12.5... 14 is the, Okay, the organic guy used to be 12 to 13.5 last quarter. What would have been under the So... So... So... The New Definition?

Jeremiah Rawlins Bickham: The new definition is 12 12 to 14. The old guide range was 12 to 13 12.

Jeremiah Rawlins Bickham: And the reason we changed it is because our expectation is that just changing the calculation methodology could improve organic by about 50 basis points this year. So we're trying to be transparent and really just give you an apples-to-apples guide range. We're definitely more confident, even more confident than we were the last time we spoke about our ability to deliver in this guide range, but we're just reiterating the guide range on an apples-to-apples basis.

Jeremiah Rawlins Bickham: Okay, so maybe I'm on, but if you and I had just gone back to the last quarter, when you gave your original 12 to 13, 5. What would it have been under your new definition, or am I not thinking about it correctly?

Jeremiah Rawlins Bickham: If we had made the change last quarter, we would have come out with an annual guide range of 12 and a half to 14. Okay, just make 50 bips as well. Okay, just want to yeah, it's expected to be worth 50 bips this year, and the difference is more pronounced in q1. Because Q1 is typically when there's actually more profit commissions that hit. Okay, for bearing with me on that.

Michael David Zaremski: Okay. My follow-up question is, you know, if we look at where the business mix is heading. And I know you don't break out organic by the three business lines, but it's, you know, underwriting management. [inaudible] Anything else you want to add?

Jeremiah Rawlins Bickham: Well, I'll give some color, Mike, on the numbers you're probably looking at, like a 30-plus percent increase in underwriting management. Remember that's total revenue growth, and there's a significant impact this quarter. I mean, the growth numbers from both the delegated authority businesses were terrific, but the growth numbers are even more gaudy in underwriting management because of M&A last year. That's where the benefits business is being housed until it's material enough to be broken out on its own. So if that's the number you're reacting to, that's a big part of the story. But longer-term growth prospects, Miles can give you a much more fulsome color on that.

Jeremiah Rawlins Bickham: Both the delegated authority businesses were terrific, but it's even more gaudy and underwriting management because of M&A last year, that's where the benefits business is.

Jeremiah Rawlins Bickham: Being housed until its material enough to be broken out on its own. So if that's the number you're reacting to that as a big part of the story, but longer term growth prospects miles can give you a much more fulsome color on that.

Miles Wuller: We appreciate the question that, so I think, at the heart of it, yes, underwriting is definitely contributing to the double-digit organic trajectory. I think we highlighted each quarter a lot of the ingredients that we delivered on last year, and structurally, they're all in place to continue into this year. Last year we brought several new MGUs to life. We did, and we've already launched one in Q1 of this year.

Speaker Change: Well look we appreciate the question.

Miles Wuller: I think at the heart of it yes, our underwriting is definitely contributing to the double digit organic trajectory.

Miles Wuller: I think we highlighted each quarter a lot of the ingredients that we delivered on last year and structurally.

Miles Wuller: They're all in place to continue into this year.

Miles Wuller: Last year, we brought several new M. Do you use to life. We did we've already launched one in Q1 of this year.

Miles Wuller: Last year we launched several tangential lines to existing MGUs, and now we're seeing the benefit of that coming into the earnings statement as organic revenue. And, lastly, we were able to include our carrier capital under management with a greater majority of our partners last year. And that was through incremental lines of business, as well as increased capital being deployed. And so again, those increases of capital under management we're seeing flow into organic this year. So that's specific to the underwriting line. And I'll let Tim comment on buying. Our Binding Authority had a...

Miles Wuller: Last year, we launched several tangential lines to existing M. Jews and now we're seeing the benefit of that coming into the earnings statement as organic revenue and.

Miles Wuller: Lastly, we were able to include all our carrier capital under management with the greater majority of our partners last year and that was through incremental lines of business as well as increased capital being deployed and so again those increases as a cap on the imagine we're seeing.

Miles Wuller: Flow into organic this year. So that's specific to the underwriting line and I'll, let Tim comment on binding.

Timothy William Turner: Our binding authority had a tremendous first quarter. We're seeing just great expansion and market share being taken there. We're capitalizing on the consolidation of the use of binding authority by intermediaries by the retailers. We're winning a lot of RFDs, and the outlook for 24 looks fantastic.

Miles Wuller: Our binding authority had a tremendous first quarter.

Timothy William Turner: We're seeing just great expansion and market share being taken there we're capitalizing on that.

Timothy William Turner: The consolidation of the use of binding authority intermediaries by the retailers, we're winning a lot of rfps and the outlook for 'twenty four looks fantastic.

Tim: Thank you.

Operator: Our next question is from Rob Cox with Goldman Sachs.

Timothy William Turner: Our next question is from Rob Cox with Goldman Sachs.

Robert Cox: Hey, thanks. Just in regards to, you know, organic growth pacing and how to think about it for the balance of the year, I know there's a lot of property business next quarter, and it seems like property is still strong, but there's also a lot of property cat, and I think that's an area where we've heard there's some more meaningful price deceleration, so I'm just curious if you think that's a headwind next quarter, if you could give any color on sort of the pacing of organic growth throughout the remainder of the year.

Robert Cox: Hey, thanks.

Robert Cox: Just in regards to.

Robert Cox: Organic growth pacing and how to think about it for the balance of the year I know theres a lot of property business next quarter and it seems like property is still strong, but there's also a lot of property cat and I think that's an area, where we've heard there's some more meaningful price.

Robert Cox: Deceleration.

Robert Cox: So I'm just curious if you think that that's a headwind next quarter. If you could give any color on sort of the pacing of organic growth throughout the remainder of the year.

Timothy William Turner: We don't we don't see it as a headwind. We see price stabilization. We're not seeing dramatic cuts at all. We're not seeing a shift in the migration of the non-admitted business. We're seeing a continued heavy flow into the channel. We're seeing a little bit more competition in London. But again, the flow remains very strong, and we're optimistic about having a great year in property

Robert Cox: We don't we don't see it as a headwind we see the pricing stabilization.

Timothy William Turner: We're not seeing dramatic cuts at all we're not seeing a shift in the migration of the non admitted bid.

Timothy William Turner: Business, we're seeing a continued heavy flow into the channel and we're.

Timothy William Turner: We're seeing a little bit more.

Timothy William Turner: Competition in.

Timothy William Turner: In London.

Timothy William Turner: But again the flow remains very strong.

Timothy William Turner: And we're optimistic to have a great year of property.

Jeremiah Rawlins Bickham: Yeah, and Rob, building on the response that I chimed in with to Elyse's question, you know, growth for the year doesn't follow a straight line. I'm sorry; we can't be more helpful. But there's nothing significant in any of the quarters this year that's worth calling out to guide you to something of a big shift. Like Tim said, the growth we expect is really balanced across property and casualty this year.

Speaker Change: Yeah and Rob.

Jeremiah Rawlins Bickham: Building on that the response that I chimed in with two at least his question.

Jeremiah Rawlins Bickham: Growth for the year doesn't follow a straight line I'm, sorry, we can't be more helpful. But there's nothing significant in any of the quarters. This year, that's worth calling out to guide you to something too.

Jeremiah Rawlins Bickham: Big shift like Tim said the growth, we expect is really balanced across property and casualty this year.

Robert Cox: Okay, thanks, that's really helpful. And then, maybe just as a follow-up.

Speaker Change: Okay. Thanks, that's really helpful. And then maybe just as a follow up.

Timothy William Turner: I was just curious about some of the, you know, specific areas you guys have called out in the past, like the D&O headwinds, the M&A headwinds, how did those shape up in the quarter? And I was also curious about... You know, the construction projects, which I think you guys have previously called out. It seems like it might have been a material tailwind for some of your peers. Did you also see that in the quarter?

Robert Cox: I was just curious on some of the specific areas you guys have called out in the past D&O headwinds M&A headwinds how did those shape up in the quarter and I was also curious on.

Timothy William Turner: The construction projects, which I think you guys had previously called out it seems like it it might've been a material tailwind for some of your peers.

Timothy William Turner: Did you also see that in the quarter.

Timothy William Turner: Yeah, we've seen the construction market have a real strong rebound. Our project opportunities increased, our commit, and our quote to bind ratios increased. We're capturing a lot more construction business across the board, residential construction in particular, infrastructure projects picked up, and that lag time from quote to bind has decreased. So we're very optimistic about having a great year in construction. D&O would be where the tailwinds have slowed. I think we're through the pain phase.

Speaker Change: Yes, we've seen the construction market.

Timothy William Turner: We have a real strong rebound or project opportunities increase our commit our quote to bind ratios increased.

Timothy William Turner: We're capturing a lot more construction.

Timothy William Turner: Construction business across the board residential construction in particular.

Timothy William Turner: Infrastructure projects picked up and that lag time from quote to bind US has decreased so we're very optimistic to have a great year in construction.

Timothy William Turner: D N O would be where the tail winds have have slowed.

Timothy William Turner: I think we're through the pain phase, we see some moderation there on the tougher D N O R E.

Timothy William Turner: We see some moderation there on the tougher D&O. Our E&O book continues to grow in areas like healthcare and social services. We're getting opportunities in things like architect and engineer E&O, and lawyers E&O. The headwinds on that pro-executive book have clearly slowed, and we see growth opportunities in 24, and then Pat could address the M&A. Yeah,

Timothy William Turner: Our book continues to grow in areas like health care and social service, we're getting opportunities in things like architects and engineers, you know lawyers and you know.

Timothy William Turner: The headwinds on that pro executive book have clearly slowed and we see growth opportunities in 'twenty four.

Timothy William Turner: And then Pat can could address the M&A.

Patrick G. Ryan: Yeah, the M&A is strong, as I said in my opening comments. A very robust pipeline.

Pat: Yeah the.

Pat: M&A is strong as I said in my opening comments, a very robust pipeline.

Patrick G. Ryan: There's no seasonality to the M&A calendar. We'll often have periods of time that are quiet, and then periods where we announce multiple deals in a short period. But to answer your question, the outlook is very strong, and we've been engaged. In several discussions, we've encountered more opportunities, and have made pretty encouraging progress on most of the Open Dialogues. The flow of deals are all high strategic value deals that we're working on

Speaker Change: Theres no season, I don't own any of the M&A calendar.

Patrick G. Ryan: Often a periods of time and acquire and then peers, where we announced multiple deals with a short period.

Patrick G. Ryan: But to answer your question the outlook is very strong and we've.

Patrick G. Ryan: We've.

Patrick G. Ryan: And engaged.

Patrick G. Ryan: They are really encouraging progress.

Patrick G. Ryan: The flow of deals are all high strategic value deals.

Patrick G. Ryan: We're working on.

Patrick G. Ryan: And the theme of Sellers preferring Ryan Specialty as a destination of choice is very exciting for us because, historically, well over half of the just short of 60 acquisitions that we've done, we were at the destination of choice. And in the discussions that we're engaged in, that's being sustained.

Patrick G. Ryan: And the theme of sellers, preferring Ryan specially.

Patrick G. Ryan: As the destination of choice.

Patrick G. Ryan: It's very exciting for us because historically.

Patrick G. Ryan: No.

Patrick G. Ryan: We were the destination of choice.

Patrick G. Ryan: And then the discussions that we're engaged with them.

Patrick G. Ryan: That's being sustained.

Miles Wuller: Robin, this is Miles. I'll just jump in. On transactional liability as it pertains to, like, a rep and warranty and tax practice. So there are tailwinds. So global M&A deal volumes are ticking back up. We believe our transactional liability practices are materially outpacing the industry. I think everybody will recall that we highlighted several times during 2023 that we had been investing heavily in transactional liability talent and geographic reach as the market was contracting, and all those decisions are bearing fruit, and we expect to be great contributors in 2024.

Patrick G. Ryan: Robin This is Myles I'll just jump in on transactional liability as it pertains to like a rep and warranty and tax practice so.

Miles Wuller: There are tailwind so global M&A deal volumes are ticking back up.

Miles Wuller: We believe our transactional liability practices materially outpacing the industry I think everyone will recall, we highlighted several times during 2023 that we had been investing heavily in transactional liabilities talent and geographic reach as the market was contracting and all of those decisions.

Miles Wuller: Are bearing fruit and we expect to be great contributors to 2024.

Miles Wuller: Thanks for the color.

Operator: As a reminder, to ask a question, please press star 1. Our next question is from Meyer Shields with KBW.

Miles Wuller: As a reminder to ask a question. Please press star one.

Meyer Shields: Thanks so much and good afternoon, Tim. Tim, I was hoping you could go maybe one level deeper in terms of the property business that's still migrating to E&S. Because I guess the mental model I had was that last year you had primary companies just dealing with much higher reinsurance attachment points, so the cat exposed business kind of moved over, and I'm wondering, maybe overly simplistically, what's left to go to E&S now?

Meyer Shields: Thanks, so much and good afternoon Tim.

Meyer Shields: Was it last year you had.

Meyer Shields: Our primary companies just dealing with much higher reinsurance attachment points. So the Catholic school business kind of moved over.

Meyer Shields: And I'm wondering maybe overly simplistically what is left to go to E&S now.

Timothy William Turner: We see opportunities to get market share and just head-to-head competition. That's always a big factor.

Meyer Shields: We see opportunities to get market share and just head to head competition, that's always a big factor as you know theres competition on all of this business.

Timothy William Turner: As you know, there's competition for all this business. We don't see any sign of migration of the business going back. So there's still a very strong flow of opportunities that move around in the marketplace. The only real competition in terms of taking business away from the U.S. E&S market would be London, Meyer. And that's hardly measurable, but we did notice it, and we mentioned it in our last call. But in terms of opportunities, we see a very strong flow coming our way.

Timothy William Turner: We don't see any sign of migration of the business going back. So there is still very strong flow of opportunities that move around in the marketplace. The only real competition in terms of taking business.

Timothy William Turner: Wave from the U S E&S market Meyer would be London.

Timothy William Turner: And that's hardly measurable, but we did notice it and we did mention it in our last call, but in terms of opportunities, we see a very strong flow coming our way.

Timothy William Turner: There's no there's no standard carrier, making an impact on taking E&S business back. We just don't see it in fact, we're having to layer and and have more shared and layered opportunities on these towers. It. It's it's still very very robust out there.

Timothy William Turner: There's no standard carrier making an impact on taking E&S business back. We just don't see it. In fact, we're having to layer and have more shared and layered opportunities on these towers. It's still very, very robust out there.

Meyer Shields: Okay, fantastic. That's very helpful. I think this is probably for Jeremiah.

Timothy William Turner: Okay.

Speaker Change: Very helpful. I think its probably for Jeremy when we look at the adjusted ratios So comping down on one hand.

Jeremiah Rawlins Bickham: When we look at the adjusted ratios, Compton Band on the one hand, and GNA on the other, Compton Band went down year over year, and GNA went up. Do we expect that trend to accelerate or decelerate as we start seeing the $60 million of savings start to hit the bottom line this year or next year?

Jeremiah Rawlins Bickham: And G&A on the others, and then went down year over year G&A Wingstop could we expect that trend to accelerate or decelerate as we start seeing 60 million of savings start hitting bottom lined up here next year.

Speaker Change: So we are going to see.

Jeremiah Rawlins Bickham: So we are going to see additional scaling in comp for sure, and over time, we'll see scaling in G&A too. But this quarter in particular, there were some timing issues related to some of our planned spend, even on the T&E side events, which change between quarters year over year. And we also have some new revenue lines that are coming on that we will incur third-party expenses for some of the upfront work.

Jeremiah Rawlins Bickham: Additional scaling in comp for sure.

Jeremiah Rawlins Bickham: And over time, we will see scaling G&A too, but this quarter in particular, there were some timing issues related to some of our planned spend even unlike the T&D side events change between quarters year over year.

Jeremiah Rawlins Bickham: And we also have some new revenue lines that are coming on that we will.

Jeremiah Rawlins Bickham: Incur third party expenses too on some of the upfront work so.

Jeremiah Rawlins Bickham: So overall, I would say you're going to see trending in the you're going to see scaling in both, but it's probably going to come a little bit more pronounced and be quicker on the comp side, call it over the next 24 or next seven quarters.

Operator: Okay, perfect. Thank you. Our next question is from Alison Jacobowitz with UBS. Hi, I was just wondering what you touched on.

Speaker Change: Okay perfect. Thank you so much.

Operator: Yep.

Alison Jacobowitz: Our next question is from Alison Jacobowitz with UBS.

Operator: Our next question is from Alison Jacobowitz with UBS.

Alison Jacobowitz: Hi, I was just wondering you touched on what you're seeing you know that you are seeing great opportunities internationally. I was wondering if you could dive a little deeper into that where where are you most focused what.

Alison Jacobowitz: What you're seeing there and maybe some highlight some of the dramatic differences you might be seeing there if there any versus domestic.

Miles Wuller: Yeah, we appreciate that. And I want to highlight that with the Castel acquisition, we benefited from several levers there. So first, it brought 135 like-minded individuals based in the UK and the Benelux region. All like-minded builders, entrepreneurs, with a great track record of underwriting profitability and building businesses. It brought 10 new lines to the company, and it actually allowed us to double down on a few capabilities that we believe deeply in, renewables, SME rep, and warranty. But on top of those facilities, it also brought us some local leadership in those jurisdictions that are going to be great resources in identifying talent, essentially getting city to city.

Alison Jacobowitz: Yeah, no. We appreciate that and I want to highlight with the <unk> acquisition.

Miles Wuller: We benefited from from several levers there so first.

Miles Wuller: It brought 135 like minded individuals based in the UK and the Benelux region.

Miles Wuller: Oh like minded builders entrepreneur is great track record of of of underwriting profitability and building businesses.

Miles Wuller: What kind of new lines to the company.

Miles Wuller: And it actually allowed us to double down in a few capabilities that we believe deeply in renewables.

Miles Wuller: Essentially getting city to city.

Miles Wuller: You know, it's not going to surprise you that a lot of distributors want to deal with a local presence. And it's going to take an on-the-ground approach to meet those folks, and so this team will be a force multiplier in helping us identify M&A opportunities, as well as increase the speed to market of international startups.

Miles Wuller: It's not going to surprise you that a lot of.

Patrick G. Ryan: I'd like to add that we see international, particularly Europe and the UK, as not fertile ground for wholesale broking but very fertile ground for delegated authority. There's been a lot of consolidation among carriers in those countries. There are great companies in each one of the countries, various European countries, including the UK, but there are far fewer, and it allows an opportunity for delegated authority for us to bring in new capital providers or work with some of the existing ones over there with innovative ideas on products, and innovative ideas on servicing different parts of the insurance industry.

Miles Wuller: But we see it.

Patrick G. Ryan: Nashville, particularly Europe and the U K.

Patrick G. Ryan: As.

Patrick G. Ryan: Hurdle ground for a wholesale broker.

Patrick G. Ryan: But very fertile ground.

Patrick G. Ryan: Carriers in those countries.

Patrick G. Ryan: But there are far fewer.

Patrick G. Ryan: And it allows an opportunity.

Patrick G. Ryan: Our delegated authority for us to bring a new capital providers or work with some of the existing over there.

Patrick G. Ryan: With innovative ideas on product.

Patrick G. Ryan: Might have ideas on servicing different.

Patrick G. Ryan: Different parts of the insurance industry.

Patrick G. Ryan: So, as we look at international, particularly European, and UK. It's really a delegated authority, but we think it's quite, quite wide open. It requires, as Miles said, Attracting the right talent, and that's why the Castello acquisition was so exciting, plus the great underwriting record. There's a lot of talent that we know over there, other experiences, and we believe that we can take the Nobles and possibly some M&A opportunities. Thank you very much.

Patrick G. Ryan: International, particularly Europe U K, it's really the delegated authority, but we think it's quite.

Patrick G. Ryan: Quite wide open.

Patrick G. Ryan: It requires as miles said.

Patrick G. Ryan: Tracking in the right talent.

Patrick G. Ryan: A lot of talent that we we know over there from.

Patrick G. Ryan: Other experiences.

Patrick G. Ryan: We believe that we can.

Patrick G. Ryan: <unk> novels.

Patrick G. Ryan: And possibly some M&A opportunities.

Patrick G. Ryan: Thank you very much.

Patrick G. Ryan: Yeah.

Operator: Once again, if you would like to ask a question, please press star, then 1. Ladies and gentlemen, there are no further questions at this time, and I will turn the call back to Pat Ryan for closing remarks.

Patrick G. Ryan: Once again, if you'd like to ask a question. Please press Star then one.

Operator: Yeah.

Operator: Ladies and gentlemen, there are no further question at this time and I'll turn the call back to Pat Ryan for closing remarks.

Patrick G. Ryan: Well, thank you for your very good questions and for your continued interest and support of our program. I look forward to speaking with you again soon, and have a good evening. Thank you. This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

Patrick G. Ryan: Well. Thank you for your very good questions.

Patrick G. Ryan: And for your continued interest and support of our firm.

Patrick G. Ryan: We look forward to speaking with you again soon.

Speaker Change: Good evening. Thank you.

Operator: This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

Patrick G. Ryan: This concludes today's conference. Thank you for your participation you may disconnect your lines at this time.

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